Rolls-Royce wins £800m submarine engine deal

BRENDA GOH

ENGINE maker Rolls-Royce yesterday unveiled an £800 million contract with the Royal Navy to look after the propulsion systems on its nuclear submarines for the next decade.

The FTSE 100 engineering firm said that the deal would save the Ministry of Defence up to £200m and would sustain 2,000 jobs.

The 2010 Strategic Defence and Security Review set the course for future defence budgets, in which the UK government said it would cut spending by 8 per cent up to 2015.

Westminster has been trying to bring order to a defence ministry widely lambasted by watchdogs and others for its chaotic and expensive weapons programmes.

The “foundation contract” with Rolls-Royce is the first of three such deals the MoD is expected to sign.

Across the foundation programme, up to £900m of savings are planned, defence minister Philip Dunne told the House of Commons yesterday.

Dunne said the contract covered the overhead, running and business costs at Rolls-Royce Submarines sites.

He said the new deal consolidated costs, focused on efficiency and secured future terms and conditions between the firm and the MoD. Dunne said: “The foundation contract will help sustain around 2,000 jobs.”